The Deal's Andrea Orr is reporting that communications equipment startup Force10 Networks has rejected a $500 million buyout offer from Nortel. I spoke with one of the investors last month who said the startup was looking for an IPO at a valuation of at least $1 billion within 18 months.

It shows guts on the part of the investors that have poured in $335 million since 1999 into the high-end switch maker to hold out for more. This group consists of Morgenthaler Ventures, Meritech Capital Partners, Crosslink Capital, U.S. Venture Partners, New Enterprise Associates and Worldview Technology Partners. Chicago-based Advanced Equities raised some of that money for the company as well from its investor network.

The interest from Nortel is a good sign for those VCs. And if their instincts are right about where communications equipment valuations are headed over the next 18 months, more offers for resilient networking startups should be coming.

For more on Force 10, see:
The Deal
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Tags: nortel, force10, vc, venture+capital.